Do we need more startups in the US? Yes, there are actually more companies dying right now then startups and small companies. While, we hear about the Googles and Facebooks, there are many thousands of startups (usually 10 times more) that fail and other small businesses. Actually the rate of businesses dying has increased dramatically such that more small businesses are going out of business than ones being created.

Do we need more jobs? Yes, while the unemployment rate is at an all-time low, there is another 11 million people who want to work but can’t and have quit looking for work so they are not counted in the unemployment statistics. About, 70 % of all new jobs are created by small businesses not large corporations – who are generally still reducing their workforces.

Do we need more entrepreneurs? Yes, but in the Heartland region of the US. The West Coast, Austin, and Boston, New York areas receive most the venture capital funding for startups. Jumpstarting entrepreneurs and new businesses in the Heartland where we need new job development is crucial to getting the region moving again economically. US local entrepreneurs should receive federal help, venture, university and non-profit assistance in getting businesses started as we have recommended in our Heartland Development Center initiative blog.

Immigrants make up a disproportionate amount of the entrepreneur base, experts believe their passion and dedication to building new businesses is strong and drive to make the American Dream come true.

Next steps:

The GOP Administration believes if immigrant entrepreneurs are to be given special visa status that Congress needs to pass a law that specifies how the program works, the number of founders to be admitted and how they are to be selected. We understand the present program for immigrant entrepreneurs is vague and established by executive order. However, President Obama was intent on giving special status to those who could start new businesses quickly and create more job opportunities for workers. Our recommendation is that Congress should be passing a law in regard to immigrant entrepreneurs as part of funding Heartland Development Centers and use the special visa to bring immigrant entrepreneurs to the Heartland where they are most needed after investing and providing entrepreneur support for native born founders. One way to gain acceptance, is to have the immigrant entrepreneur sponsored by a startup co-founder native born person in the region, then have them work together as a team.

(Editor Note: this is the second of a series reviewing the new GOP administration policies and programs.)

The View:

Immigrants are in constant fear of being deported when they hear of the policy plans for the new GOP administration and cabinet appointees talking about ‘rounding them up like FDR did with the Japanese’ or registering all Muslims. Yet, immigrants while being 15 % of the work force are 25 % of the entrepreneurs. Business formation is the number one employment engine in our economy. Foreign born labor participation far outstrips that of native workers. Plus, Latino immigrants are driving demand for homes and contribute to paying the mortgage. When mass deportations were implemented between 2005 and 2013, foreclosures hurt the local Latino communities harder than other communities. Researchers Jacob Rugh and Matthew Hall found that 75 % of 1.2 million Latino households had mixed legal status residents. They would pool financial resources to afford the mortgage, so when an illegal resident was deported the family often lost their home. The Action: we need to enact programs the ensure that there is an opportunity for them to continue to build businesses in many sectors of our economy, keep families together, speed legal entry for immigrants, develop a path toward legal status for those here and deportation for convicted felons. Let’s ensure that all US residents have an opportunity to work hard to achieve the American Dream.

The Story:

Recently, the NY Times interviewed a young immigrant entrepreneur who said, “A lot of (professional) people are successful here in the (New York) city, it is because there are immigrants to fill the roles that let them use their time to advance their careers,” Ms. Elizabeth Vilchis said. “If we take that away, the whole thing crashes.” Ms. Vilchis, is an entrepreneur running a food delivery service that caters mostly to New York City professionals who can’t take time to eat away from their desk.

One immigrant entrepreneur said, after the November election that he was “hoarding resources and cash, because I don’t know what happens next.” Many immigrants have started construction, cleaning services, and restaurant businesses, now they are talking with accountants about the implications of selling their businesses to take profits and be ready to leave at any time.

Thousands of other immigrants are entrepreneurs throughout the US. Professors Sari Pekkala Kerr from MIT, and William Kerr at the Harvard Business School, found that while immigrants make up 15 % of the labor force they are 25 % of the entrepreneurs in the US. They are inventive too, accounting for 25 % of all patent applications. Immigrants making a growing contribution to the US economy as noted in this chart from the Kerr’s report (right click to enlarge the image in another tab):

With new business formation at an all-time low, and business closings surpassing new business formations for the first time 2 years ago – immigrant entrepreneurship is of even greater importance.

Immigrants have a key role to play in our economy, for example in housing. Last week, Jacob Rugh and Matthew Hall published in the Journal of Sociology the results of their research into the mass deportation of immigrants between 2005 and 2013. About 85 % of those deported wereworking Latin American men. They found in predominantly Latino communities the deportation activity by the Immigration and Customs Enforcement agency increased the foreclosure rate significantly and hurt the overall housing market worse than in other communities during the Great Recession. Prior to the deportation activity the foreclosure rates were similar to non-Latino communities. They found legal and illegal residents were pooling resources to meet the financial needs of their household. Three quarters of 1.2 million households had at least one undocumented immigrant living in a household of legal residents. The researchers noted that deportation can increase foreclosure rates in the same way that divorce, or unemployment do in other groups. Even worse, deportation will likely have the effect of hindering the assimilation of immigrants into American society. Mr. Rugh noted that from a self-interest perspective, the Latino community is a big part of the future housing market, so people should be interested in fostering the growth of buyers for their homes.

Foreign born workers have a higher labor participation rate than native born workers in our economy as this chart from the Bureau of Labor Statistics indicates (right click to enlarge the image in another tab):

Immigrants are crucial to the success of our economy. We should not be damaging the entrepreneurial engine fueling much of our economic and employment growth. Yet, the new GOP administration seems bent on dramatically reducing the immigrant contribution to the US economy. Cabinet appointees have called for deporting illegal immigrants and the illegal immigrant parents of legal children. The cabinet appointee for Homeland Security has called for ‘some type of registration system for all Muslims’ in this country, which seems like a scheme to track Muslims or as he proposed, “the FDR program of rounding up Japanese nationals is a good model’.

Beyond the civil rights violations of Muslims and many groups singled out by this administration there will be a catastrophic effect on our economy when policies of fear, intimidation and monitoring are implemented.

We need to stand firm for the rights of immigrants and all US residents to ensure there is an opportunity to work hard toward achieving the American Dream.

The Action:

Enact programs that help our economy grow with the help of immigrants for agriculture, hospitality, domestic services, construction, delivery, information technology and other sectors.

Keep families together where there are mixed illegal and legal residents in the home.

Enact legislation that provides a path for becoming a legal resident that requires hard work, commitment, dedication for years of service.

Build programs in immigrant countries to reduce their interest in illegally coming to the US.

Speed legal entry programs, make it easier for immigrants to come to this country for work or family needs.

Focus deportation programs only on those with felony convictions, or terrorists.

Prevent any program of registration or monitoring by religion, race or ethnicity from ever being enacted.

(Editor Note: References for this article are in the Research tab under Immigrant Contributions)